SUPPOSE YOU ARE EVALUATING TWO ANNUITIES. THEY ARE IDENTICAL IN EV...

23. Suppose you are evaluating two annuities. They are identical in every way, except that one is an ordinary annuity and one is an annuity due. Assuming an interest rate of 10% per annum, which of the following is true? A) The ordinary annuity must have a higher present value than the annuity due. B) The annuity due must have the same present value as the ordinary annuity. C) The ordinary annuity must have a lower future value than the annuity due. D) The present value of annuities will differ by the one annuity payment. E) Answers C & D are correct. Solution: C